Enco 5050 Quiz 1

 Question 1

0.2 out of 0.2 points

| |

| Economic theory is a valuable tool for business decision making because it | | | |

| Selected Answer: | identifies for managers the essential information for making a decision. |

| | | |

 Question 2

0.2 out of 0.2 points

| |

| Economic profit is

  | | | |

| Selected Answer: | the difference between total revenue and the opportunity cost of all of the resources used in production. |

| | | |

 Question 3

0.2 out of 0.2 points

| |

| Consider a firm that employs some resources that are owned by the firm.  When accounting profit is zero, economic profit

  | | | |

| Selected Answer: | must be negative and shareholder wealth is reduced. |

| | | |

 Question 4

0.2 out of 0.2 points

| |

| Suppose Marv, the owner-manager of Marv’s Hot Dogs, earned $72,000 in revenue last year.  Marv’s explicit costs of operation totaled $36,000.  Marv has a Bachelor of Science degree in mechanical engineering and could be earning $30,000 annually as mechanical engineer. | | | |

| Selected Answer: | d. both b and c. |

| | | |

 Question 5

0.2 out of 0.2 points

| |

| Owners of a firm want the managers to make business decisions that will | | | |

| Selected Answer: | d. both a and bare correct when revenue and cost conditions in one time period are independent of revenues and costs in future time periods. |

| | | |

 Question 6

0.2 out of 0.2 points

| |

| When a firm is a price-taking firm, | | | |

| Selected Answer: | all of the above |

| | | |

 Question 7

0.2 out of 0.2 points

| |

| Economic profit is the best measure of a firm’s performance because | | | |

| Selected Answer: | the opportunity cost of using ALL resources is subtracted from total revenue. |

| | | |

 Question 8

0.2 out of 0.2 points

| |

| Which of the following is an example of an implicit cost for a firm?...